Etsy Is In The Flop Era, And Sellers Are Fleeing

In 2017, Emily Olson, a stay-at-home mom in Boulder, Colorado, started selling custom-made pictures and photos of puppies. Etsy.

His watercolors were simple and inexpensive—portraits of puffy eyes and malamutes in small canvases, which sold for $75 to $300 each—but dog owners loved them: “It was a labor of love,” he says. In 2021, she reportedly made over $40,000 from her Etsy shop, and social media the following received 180,000 followers YouTube.

But in 2022, he noticed something strange: His sales began to drop dramatically. Competitors flooded the platform, and he continued to find copies of his work on download sites like Alibaba, where they were advertised as original creations. Then there were AI-generated photos of pets, which remove their listings from search results and sell them for a fraction of the price.

The biggest disappointment, he says, was that the AI-generated images were getting positive reviews. “People said, ‘This is the most beautiful picture, I love it in my daughter’s room.’ They didn’t really know or care who made it, they just ate it,” says Olson. In 2022, he says, his sales dropped by 30 percent, followed by 50 percent the following year.

In 2024, Etsy officially announced that it will continue to allow AI-generated art on its platform, as long as sellers disclose it. Frustrated by the process and the decline in his sales, Olson wrote a movie on his YouTube channel in January 2025 titled: “Etsy Was Great… Until It Wasn’t – Why I’m Leaving.” “Etsy doesn’t agree with my values ​​these days,” he says in the video. “It feels like they’re just another big company that’s chasing profits more than anything else.”

Once home to amateur vulva jewelry and drag dolls, former Etsy sellers like Olson are now migrating from the platform out of frustration with what they see as lax policies. Competitors are emerging. Fybe, for example, a new online trading market, will open to sellers on August 1. It clearly prohibits products created by AI and sending them upstream on the platform, and it will rely on dedicated managers and negotiate directly with sellers to ensure that all products are made by people.

Both buyers and sellers on Etsy are “a little dissatisfied,” says Rachel Powell, founder of Fybe. “I thought if we could start a platform that has a human perspective and only allow sellers that don’t use AI or use downloads, then we can meet a real need in the community.”

On the subreddit r/EtsyCommunity, there are several threads from angry sellers who have been forced to drop sales and the amount of what one user calls “AI-generated slop” that isn’t labeled as such. “Every maker I’ve talked to keeps complaining, and Etsy doesn’t seem to care,” it concluded.

It’s not just mass-produced mugs or T-shirts. Consumers are satisfied with AI-generated product listings for crocheting patterns, crab courses, though ancient weapons. Long-time sellers say the handmade jewelry favored by platforms is disappearing, thanks to the growing market of online merchants. promoting Etsy as an AI-driven competitive environment.

“The whole AI thing has really disrupted Etsy for sellers, big time,” says Chloe Rose, an artist and designer who for years has sold stickers and original watercolors on the platform.

Viktor, a UK-based artist who has been on Etsy for 10 years, says his sales have dropped 98 percent in the past year alone, thanks to people using the platform as “an easy way to make quick money.” “People have learned not to trust once-trusted sites like Etsy, because they’re tired of seeing the slippery slope of AI that’s now destroying the site,” says Viktor, who uses his online pseudonym for privacy reasons. “Unfortunately, this has turned potential customers away from real artists.”